Increase in credit cards and UPI payments shows increased consumption: Report

Credit cards rise, UPI payments show rising consumption: Report

New Delhi:

Experts and market participants say the increase in credit card payments and UPI indicates increased consumption amid the recovery of economic activities with the strong impact of the Covid pandemic.

According to RBI monthly data, transactions on Unified Payments Interface (UPI) increased from Rs 9.83 lakh crore in April this year to Rs 10.73 lakh crore in August.

Similarly, credit card spending through PoS terminals (Point of Sale) has increased from Rs 29,988 crore in April this year to Rs 32,383 in August. Credit card spending across merchant platforms electronics, worth Rs 51,375 crore in April, rose to Rs 55,264 crore in August.

Rama Mohan Rao Amara, MD and CEO, SBI Card, says credit card balances have grown at a Compound Annual Growth Rate (CAGR) of 16% between FY17 and FY17. financial 22, according to RBI industry data.

“With increasing adoption and usage of credit cards, spending has also increased. Over the past few months, the industry has seen credit card monthly spending consistently surpass Rs quantifiable. 1 lakh-crore, showing a strong consumption pattern. With the festive season coming, everyone around is expecting and waiting,” he said.

Market experts and players say that the increase in volume and value of digital transactions bodes well for the economy. It also indicates that consumers are becoming more and more familiar with different digital payment methods and giving up their inhibitions.

Anand Kumar Bajaj, Founder, MD & CEO, PayNearby, thinks that the increase in the volume and value of card payments and UPI paints a positive picture of the digital payments landscape in the country.

This boom indicates that Indian consumers are letting go of their inhibitions and becoming more open to the adoption of online payments, he said.

“As consumers and merchants have experienced the ease and security of digital payment methods, it has brought about a change in behavior,” said Bajaj.

The government push towards digital transactions, increasing income, increasing use of smarthpones and improving internet connectivity is supporting the growth of online payments. Besides, more and more merchants are implementing digital payment infrastructure.

According to Mandar Agashe, MD & Vice President of Sarvatra Technologies, increased spending means increased consumption as the uncertainty caused by the pandemic almost dissipates and the market returns to normalcy.

“July and August are mainly marked by off seasons on e-commerce platforms and various offers that merchants can access to encourage trading via UPI. UPI is expected. will boom further during the current festive season due to increased demand from Tier II and III towns Agashe added.

Anurag Sinha, CEO and Founder of OneCard & OneScore, said the increase in both payment volume and value in recent months across platforms clearly reflects the strength of the retail economy. as well as the revival of consumer confidence.

Last month, the Reserve Bank of India sought public opinion on fees and charges in the payment system, with the aim of making such transactions reasonable as well as economically beneficial. economic for the entities involved.

Fees in a payment system are costs imposed by a Payment Service Provider (PSP) on a user (initiator or beneficiary) to facilitate a digital transaction. Fees are recovered from the originator or the beneficiary depending on the type of payment system.

Ranen Banerjee, Partner – Economic Advisory Services, PwC India, said an increase in UPI transactions bodes well for the economy but “we may not be able to directly correlate” it with consumption. as there are a number of factors that are leading to more digital transactions – the main one being the growth of e-commerce.

“Growth in credit card spending rather than debit card spending can be viewed from two lenses,” said Banerjee. One is that households are spending more or the other is that they are stressed. straight and they depend on credit”.

Market players add that, traditionally, the travel, entertainment and restaurant categories have been among the main categories for consumers when spending online via credit cards.

“With the easing of travel restrictions, we have also seen a spike in travel spending during the summer. Spending in this category has surpassed pre-Covid levels,” Amara said. .

(Except for the title, this story has not been edited by NDTV staff and is published from a collaborative feed.)

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